Probe International Mekong Press Backgrounder #11
September 15, 1998
Crisis, What Crisis?
Not even the economic crisis sweeping Asia can shake the World Bank’s commitment to the Nam Theun 2 hydro dam in Lao PDR. The dam’s developers have no customers for the power and no commercial lenders willing to risk their capital on the US$1.3-billion venture.
The World Bank claims that the 681-megawatt dam will generate US$250 million annually from electricity exports but the only prospective buyer, Thailand’s Electricity Generating Authority (EGAT), has a glut of generating capacity, no money to buy power from Lao PDR, and a lineup of private power producers at home ready to meet demand into the next century.
To cajole private investment in Nam Theun 2, World Bank officials reportedly want to lend EGAT the money to buy the power it can’t afford and doesn’t need. The World Bank is also prepared to guarantee loans from commercial lenders who otherwise reject Nam Theun 2 as “unbankable.”
Last November, the World Bank’s vice-president of its East Asia and Pacific department, Jean-Michel Severino, visited Lao PDR to grant the Nam Theun 2 developers nearly US$1 million for resettlement and environmental planning.
If completed, the dam would flood more than 450 square kilometres of the country’s largest biodiversity conservation area, forcing more than 5,000 people into state-run settlements.
Nam Theun 2 developers include Electricité de France (30 %), the government of Lao PDR (25 %), construction companies Ital-Thai Development (15 %) and Transfield (10 %), Thai financing company Phatra Thanakit (10 %), and Thai telecommunications company, Jasmine International (10 %).
Categories: Mekong Utility Watch